dd
Which of the following periods in U.S. economic history had the slowest growth rate, as measured by the average annual increase in real GDP per hour worked?
1974-1995
Consider the figure on the right. It shows growth rates in real GDP per hour worked in the United States for various periods from 1900 onward. According to the figure, economic growth (as measured by growth in real GDP per hour worked) in the United States was slowest during the period from How might the growth rates in the figure be different if they were calculated for real GDP per capita instead of per hour worked? (Hint:How do you think the number of hours worked per person has changed in the United States since 1900?)
1974-1995 The growth rate of real GDP per capita would be higher than the growth rate of real GDP per hour.
In a speech in 2009, President Barack Obama made the following observations: "I know that for many, the face of globalization is contradictory...Trade can bring new wealth and opportunities, but also huge disruptions and change in communities." Source: "Obama's Speech in Cairo," Wall Street Journal, June 4, 2009. How does trade bring "new wealth and opportunities"?
A and B only
Which of the following are assertions made by opponents of globalization?
All of the above are assertions made by opponents of globalization
An article in the Wall Street Journal observes: "For 2008, productivity grew an astounding 2.8% from 2007 even as the economy suffered through its worst recession in decades." Source: Brian Blackstone, "Productivity Proves Resilient," Wall Street Journal, April 29, 2009. How is it possible for labor productivitylong dash—output per hour workedlong dash—to increase if outputlong dash—real GDPlong dash—is falling?
All of the above.
Which of the following statements about compounding is correct?
Compounding magnifies even small differences in interest rates or growth rates over long periods of time.
In most countries, political stability has little to do with economic growth.
False
Consider the choices below. All of these except one truly represent the record of productivity growth in the United States from 1800 to the present. Find the one that does not belong. Which one of the following does not explain the slowdown in productivity growth from the mid-1970s to the mid-1990s? All of the following contributed to an increase in productivity growth from 1996 to the present except an
GDP per capita fell rapidly between 1900 and 1950. Workers lacked incentives to work hard as their job security was at its lowest. improvement in workers' skills due to better education and training.
The role of the entrepreneur becomes much more important in the new growth theory LOADING... long dash—the endogenous growth modellong dash—than in the traditional economic growth model LOADING... because
In the new growth theory, entrepreneurs play a key role in the development and adoption of new and sometimes untried technologies.
Economist George Ayittey, in an interview on PBS about economic development in Africa, states that of the 54 African countries, only eight have a free press. For Africa's economic development, Ayittey argues strongly for the establishment of a free press. Source: George Ayittey, "Border Jumpers," Anchor Interview Transcript, WideAngle, PBS.org, July 24, 2005. A free press will be vital for enhancing A free press could help reduce corruption, which would then promote growth, by all of the following except:
Property rights and the rule of law and controlling corruption Publishing gossip columns about a politicians personal matter
How does technological change affect the per-worker production function? In the long run, a country will experience an increasing standard of living only if
Technological change shifts the per-worker production function up. the country experiences continuing technological change.
The graph on the right shows the relationship between country's initial level of GDP per capita and its growth rate over the following years. The horizontal axis shows the initial level of GDP per capita, and the vertical axis shows the rate at which GDP per capita is growing. Use the graph to help determine which of the following statements regarding economic growth are true:
The industrial countries such as Ireland and Japan that had the lowest incomes in 1960 grew the fastest between 1960 and 2004.
The figure in the window on the right shows how growth rates of real GDP per capita for the entire world have changed over long periods. Based on the data from the figure on the right which one of the following statements is false?
The smallest acceleration in growth occurred during the twentieth century as the average annual growth rate increased from 1.3 percent per year to 2.3 percent per year.
The figure above shows the levels of GDP per capita around the world in 2012. GDP is measured in U.S. dollars, corrected for differences across countries in the cost of living. Use the figure to help indentify which one of the following statements is true:
Western Europe, Australia, Canada, Japan, New Zealand, and the United States are high-income countries.
Along the downward-sloping catch-up line, a country near the top of the line is
a poor country growing rapidly.
Some economists argue that that the "new economy" has led to an increase in U.S. productivity growth since 1995. What caused the development of the "new economy"?
advances in information technology
Most of the poor countries experience slow growth because of all the following reasons except
excellent public health and education
Investment tax credits allow
firms to deduct from their taxes some fraction of the funds they have spent on investment.
A columnist in the New York Times observes that, "many analysts agree that economic reform, of which integration into the global economy was a key element, has lifted millions of people out of poverty in India." Source: Vivek Dehejia, "Has Globalization Helped India's Poor?" New York Times, October 7, 2011. The term "integration into the global economy" means Integration into the global economy has
globalization and more integration of trade. reduced poverty in India by increasing the growth rate of the economy and a higher rate of economic growth generally results in faster poverty reduction.
More people in high-income countries than in low-income countries tend to believe that rapid rates of economic growth are not desirable. Recall the concept of a "normal good." Some people in ________ -income countries are _____ with certain consequences of rapid economic growth, such as global warming.
high; concerned
In the 1980s and 1990s, a small group of countries experienced high rates of growth. These countries are sometimes called the newly industrializing countries. Where are most of these countries located?
in East Asia
Suppose the per-worker production function was shaped as shown in the graph at right. If a country was accumulating increasing quantities of capital per hour worked, this country would experience
increasing labor productivity and higher levels of economic growth.
Economist Robert Gordon of Northwestern University has argued that: My interpretation of the [information] revolution is that it is increasingly burdened by diminishing returns. The push to ever-smaller devices runs up against the fixed size of the human finger that must enter information on the device. Most of the innovations since 2000 have been directed to consumer enjoyment rather than business productivity, including video games, DVD players, and iPods. iPhones are nice, but the ability to reschedule business meetings and look up corporate documents while on the road already existed by 2003. Source: Robert J. Gordon, "U.S. Productivity Growth over the Past Century with a View of the Future, "National Bureau of Economic Research Working Paper 15834, March 2010. If Gordon's observations about the information revolution are correct, that implies
it will be difficult to sustain high growth rates in U.S. labor productivity in the future.
At the macro-economy level,
knowledge capital exhibits increasing returns and physical capital exhibits decreasing returns.
Firms are likely to underinvest in research and development, which slows the accumulation of knowledge capital, slowing economic growth, because Government policy can increase the accumulation of knowledge capital in all the following ways except by:
knowledge capital is both nonrival and nonexcludable; other firms can freely access the research and development of one particular firm. investing in capital accumulation.
Productivity growth rates matter because
productivity growth rates have a big impact on future economic growth.
The average growth rate is the ________________ between 2003 and 2013, and the total percentage increase in real GDP is the ______________________.
rate at which GDP must grow on average each year; percentage increase in real GDP between the two years.
Which of the following events marks the beginning of significant economic growth in the world economy?
the Industrial Revolution in England
The labor markets in the United States have greater flexibility and the financial system in the United States has greater efficiency than other higher-income countries, such as those in Europe, because in This greater flexibility in labor markets and greater efficiency in financial markets
the United States, labor markets have less government regulations so workers have job mobility to better match their skills with jobs and the financial markets provide better legal protection and liquidity to investors. lead to increases in productivity that contribute to rapid growth in real GDP per capita for the United States.
Recently, economists Carol Shiue and Wolfgang Keller of the University of Texas at Austin published a study of "market efficiency" in the eighteenth century in England, other European countries, and China. If the markets in a country are efficient, a product should have the same price wherever in the country it is sold, allowing for the effect of transportation costs. If prices are not the same in two areas within a country, it is possible to make profits by buying the product where its price is low and reselling it where its price is high. This trading will drive prices to equality. Trade is most likely to occur, however, if entrepreneurs feel confident that their gains will not be seized by the government and that contracts to buy and sell can be enforced in the courts. Therefore, the more efficient a country's markets were, the more its institutions would have favored long-run growth. Shuie and Keller found that in 1770, the efficiency of markets in England was significantly greater than the efficiency of markets elsewhere in Europe and in China.
the efficient market system thrived due to a stable British parliament and an independent court system.
What term describes the relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant? Along the per-worker production function, what happens to real GDP per hour worked as capital per hour worked increases?
the per-worker production function Real GDP per hour worked increases at a decreasing rate.
In his book The White Man's Burden, William Easterly reports that A vaccination campaign in southern Africa virtually eliminated measles as a killer of children. Routine childhood immunization combined with measles vaccination in seven southern Africa nations starting in 1996 virtually eliminated measles in those countries by 2000. A national campaign in Egypt to make parents aware of the use of oral rehydration therapy from 1982 to 1989 cut childhood deaths from diarrhea by 82 percent over that period. Source: William Easterly, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good, New York: The Penguin Press, 2006, p. 241. As a result of the near elimination of measles and the large decrease in childhood deaths from diarrhea in southern Africa and Egypt, The near elimination of measles and the large decrease in childhood deaths from diarrhea in southern Africa and Egypt The elimination of measles and childhood deaths from diarrhea will
the standard of living for these low-income countries increased significantly. did not increase real GDP per capita, but increased productivity and human capital resulting in a higher standard of living. remove a major impediment to growth, increase productivity and should eventually lead to increases in real GDP per capita.
Growth rates matter because living standards may stagnate in an economy that grows too slowly.
true
The Roman Empire lasted from 27 B.C. to 476 A.D. The empire was wealthy enough to build such monuments as the Roman Coliseum. Roman engineering skill was at a level high enough that aqueducts built during the empire to carry water long distances remained in use for hundreds of years. Yet the growth rate of income per capita during the empire was very low, perhaps zero. Consider the following list of preconditions for economic growth. Which one of the following reasons seems the most likely explanation for why the Roman Empire was unable to bring about sustained economic growth? If the Roman Empire had been able to bring about sustained economic growth, it is likely that the standard of living today would .
wars and revolutions be substantially higher
Economist Charles Kenny of the World Bank has argued that: The process technologieslong dash—institutions like laws and inventory management systemslong dash—that appear central to raising incomes per capita flow less like water and more like bricks. But ideas and inventionslong dash—the importance of ABCs and vaccines for DPTlong dash—really might flow more easily across borders and over distances. Source: Charles Kenny, Getting Better, New York: Basic Books, 2011, p. 117. If Kenny is correct, these facts indicate that these low-income countries As these countries become able to increase their standards of living, there
will have a healthier and more productive labor force as there is significant improvment in health, education, and civil and political liberties. will be economic growth but in order to have sustainable growth, these countries need their incomes to increase.
Economics arrives at the conclusion that economic growth will always improve economic well-being. Do you agree?
Yes, economic growth increases living standards, improves health and education, and builds a corruption-free society.